Possible privacy concerns, but I like Google's personal search
Since nothing you do on the internet is really private without taking some effort, I just accept that. Now, in practice, only software agents are likely to be monitoring what we do on the web, whether it is Google, Yahoo, or one of dozens (or more!) companies that make our business their business. US, UK, etc. governments have had the ability to track internet and telephone traffic for a long time, so why not private companies.
Back to privacy: it is easy to encrypt email, etc. and I do do that for some customers who request it. I also have one old (but with all security patches applied!) computer that I use for nothing but online banking. Sometimes privacy and security are important and sometimes they are not.
Another way I voluntarily give up privacy (again, for much convenience) is by using del.icio.us to organize all of my bookmarks which mostly have to do with research, my business, and self-study educational resources. At the end of the day, I don't feel like I give up any competitive advantage by sharing my bookmarks.
I am working (so far for only about 12 hours) on KBdocs.com - it is still in beta, with many features planned. Anyway, users of this system trust me to respect their privacy just the way that I expect Google, Yahoo, etc. to respect my privacy. At the end of the day, just deal with people and companies that you feel that you can trust.